Appendix E: CO2 for use in algae cultivation

Overview

An aquatic plant, microalgae are one of the most abundant and highly adapted forms of life on the planet. They form the foundations of food chains and play a vital role in absorbing carbon dioxide from the atmosphere. Many species produce a high proportion of natural lipid by weight and over millions of years have been systematically fossilised in large deposits, transforming into the fossil crude we extract and use today. There is currently significant interest in the potential of algae to produce vast quantities of oil (mostly with a view to liquid transport fuel substitutes) at a price that is competitive with crude oil.

Aquatic microalgae represent a highly productive source of biomass that can avoid many of the challenges associated with utilisation of terrestrial biomass and ‘1st generation’ biofuel crops by using non-productive land area and non-potable water for cultivation. The injection of CO2 is seen as an important factor which improves the economics of algal growth systems making it a potential volume user of concentrated CO2 streams. As with CO2 supplemented atmospheres in industrial greenhouses, bubbling CO2 through algal cultivation systems can greatly increase productivity and yield (up to a saturation point).

To date, There have been no known successful attempts to commercialise high volume production of algae strains for energy and material purposes as the growth and processing variables are difficult to control at competitive cost. That said, many of the developments in recent years are shrouded in commercial secrecy and it represents potential for a CO2 reuse option of significant scale, so the precise status is difficult to ascertain.

Algae can be cultivated in systems which are controlled to varying degrees. Generally these systems can be described as either ‘closed’ or ‘open’. Closed systems or ‘photo-bioreactors’ (PBRs), typically banks of transparent tubes or bags through which CO2 is pumped, offer the highest degree of control over environmental parameters and reduce the risk of bacterial contamination, though they are inherently capital intensive and complex. Open systems, consisting of a pond mixed by a large paddlewheel, are technologically simple and are relatively low cost. Both systems require a mixture of critical nutrients, water and sunlight.

Once harvested, algal biomass can be processed in numerous ways to extract economic value, depending on the desired output product/s. Commonly, The natural oil fraction (some species are capable of producing 70%wt oil content) is sought as a feedstock for biodiesel production, food products, chemicals, nutriceuticals or for cracking into smaller base units before reforming to a wide range of other products. Where CO2 abatement/capture is the focus, high oil-yielding species are not preferred as this compromises productivity overall however the biomass product is still valuable. The biomass husk that remains after oil extraction has uses as fertiliser or animal feed. The algae biomass can also be fermented to produce ethanol, digested anaerobically to produce biogas or pyrolysed to generate oil, gas and char. There are also certain algae that secrete ethanol or even hydrogen as a byproduct of metabolic processes and these are also under investigation.

The potential productivity of algal cultivation systems is claimed to be several times higher than the best performing land based crops. At present there are no systems that can reliably produce algal biomass year round on a large industrial scale with the necessary yields for meaningful energy production, however recent activity and investment in the sector is high and it is developing rapidly.

Renewable oil production process

Technology status

The market for pharmaceutical and nutriceutical microalgae is well established and mature, albeit these products fetch a relatively high market price per tonne of end-user product (e.g. Spirulina), hence are less reliant on productivity and can be grown in simple, open pond systems. There are currently no known closed algal cultivation systems for biomass/biofuel production operating on a commercial platform as yet though there are many around the world emerging at pilot or demonstration scale. In short, it is no longer just an idea or laboratory experiment and several large global companies including BP, ExxonMobil, Chevron, Connoco Philips, Virgin Fuels, Anglo Coal and Royal Dutch Shell have invested heavily in research and are currently carrying out feasibility studies and trials with various systems.

Research status

Research is broad and spans several decades of investigation – The idea is not new, but making it a commercial reality has been difficult, mostly due to inability to compete with vastly cheaper supplies of fossil energy. Research studies over the years have investigated a variety of cultivation and processing options and have identified numerous potential output markets. Research is also being done to identify a ‘lipid trigger’ e.g. genetically modifying strains to produce more oil. A challenge is not only cultivating the algae itself but in extracting useful products out of it through application of efficient harvesting and processing techniques.

Since 2007, There has been an explosion of research institutes around the world that have turned their attention to algae, mostly driven by the commercial opportunity inherent in capturing even a fraction of the liquid transport fuel market. Israel, Japan, China and the US have a long track record in algae research, with Australia and NZ now also emerging with several large industry-based collaborations.

Project development

Numerous pilot and commercial demonstration projects are currently underway (reportedly 200 or more ventures exist); including retrofitting algae cultivation systems to power station exhausts. Sample projects/ventures include:

Algenol: An American company called Algenol (http://www.algenolbiofuels.com) is planning to develop an US$850 million algae plant in the Sonora Desert, with development set to begin in late 2010. It is estimated that around 6 million tonnes of CO2 per year will be reused which will in turn produce up to 1 billion gallons of ethanol (170,000 acres at 6,000 gallons per acre). A supply agreement has been signed with Mexico’s Federal Commission of Electricity (CFE). The sustainability of the project and potential success are very promising as the highest consumer of ethanol in the world is situated only 300 km away from the actual site e.g. The United States.

Solazyme: A novel process that doesn’t use sunlight at all and grows algae in the dark using sugars. Solazyme’s unique microbial fermentation process allows algae to produce oil in standard fermentation facilities quickly, efficiently and at large scale, without the limitations of surface area exposure to sunlight. The company claim to be already producing large volumes of oil already and have signed high profile deals with large corporations including Unilever, Chevron and the US Navy.

MBD Energy: MBD’s process uses algae to recycle captured industrial flue-gas emissions by conversion into oils, suitable for manufacture of high grade plastics, transport fuel and nutritious feed for livestock. MBD claim to have reached agreements for pilot plants to be established at three coal-fired power stations in Australia – Loy Yang A (Vic), Eraring Energy (NSW) and Tarong Energy (Qld) and now count Anglo Coal as a major investor. When fully operational, The pilot plants (on a per hectare, per annum basis) are estimated to be able to produce 140,000L oil and 280 tonnes of meal for energy production or stock feed, abating 800 tonnes of CO2 in the process. Commercial scale operation is targeted for 2013 at an 80Ha scale, with a plan to introduce a demonstration plant by 2015.

CO2 utilisation

Typically 1.8 to 2 tonnes of CO2 will be utilised per tonne of algal biomass (dry) produced, though this varies with species and cultivation conditions. On a productivity basis, The following diagram compares algae to other forms of bio-oil derivatives, demonstrating its high conversion efficiency (Courtesy US DOE – Algal Biofuels Roadmap 2009):

Superior oil yield compared to other biomass feedstocks

Source: US Department of Energy - Algal Biofuels roadmap 2009

Potential markets

There is potential to replace traditional petroleum derived products such as transport fuels with algae cultivated products through utilisation of the natural lipid fraction. Algal oil has potential in many of the world’s largest markets including transportation fuel, livestock feed, agricultural fertiliser, oleo-chemicals, as well as pharmaceutical and nutraceuticals markets. Additional processing options also offer potential for production of a high value char product, suitable in many instances as a metallurgical char, activated carbon or for soil remediation and bio-sequestration. Because the entire algae biomass can be used for value capture, The production process can be quickly and efficiently tailored to adjust to changing market demands.

Size of market

The likely use of the algae would be for the large scale production of biomass fuel which has a large potential market. It is forecast that by 2022 algae bio-fuels are the largest bio-fuel category overall, accounting for 40 billion of the estimated 109 billion gallons of bio-fuels produced

US market

In 2009 The US produced 500 million gallons of biodiesel against a capacity of 2,200 million gallons.10

European market

Europe is currently the world’s largest biodiesel market; and is expected to be worth US$7.0 billion by 2014. In 2008, The EU produced around 5m tonnes of biodiesel against a capacity of around 10 million tonnes.

Market drivers

A desire for energy security (specifically, transport fuel) and high volume CO2 abatement are key drivers in the push for algal oil. Proponents argue that while a carbon price would be useful, it is not essential in the medium to long term given the projections for energy costs.

Level of investment required (to advance the technology)

The use of recycled CO2 for algae cultivation is still in the early research and development stages. There are currently no large scale algae cultivation projects in operation and the commercialisation of the technology is likely to require significant investment.

Algae farms are large and expensive with some researchers estimating capital costs of US$138,000 per hectare and US$43,800 per hectare per annum of operating costs (Campbell et al 2009). The further CO2 capture and transport costs are likely to require additional capital and operating funding.

Potential for revenue generation

If algae bio-fuels can be used as an alternative vehicle fuel then the revenue potential of the technology is significant, as even a modest share of the current petroleum market will result in considerable revenues.

Price sensitivity

Prices are not likely to be competitive with crude oil equivalents until costs of algae cultivation and processing systems decrease or the price of crude oil increases. As yet to be fully commercialised, algae systems are highly exposed to fluctuations in the price of fossil crude, hence a need to also focus on additional market opportunities. A positive price sensitivity would be to the emergence of an international carbon price signal though most known players claim this is merely a ‘sweetener’ and their business models do not require this.

Commercial benefit

Algae cultivation systems have potential to play a key role in the development of bio-refineries, where multiple products are produced from an integrated system using biologically derived feedstock – much like the oil refinery complexes of today. This enables adjustment of the business model to serve a variety of market opportunities as they change or emerge. The technology enables co-location with power stations on marginal land not otherwise useful for other forms of value creation or agricultural output.

Can exploit point source emissions effectively (industry, stationary power generation), requiring little distance for transport and storage of CO2 feed.

Algae cultivation systems can be built on marginal land avoiding any competition with terrestrial food crops, an issue which has constrained first generation bio-fuels.

Sewage waste-water can be utilised as a source of nutrients, reducing the burden on sewage treatment plants.

The yield of an algae cultivation system is anticipated to be ten times higher per area of land compared to terrestrial vegetable oil crops (such as soy, canola, jatropha).

Can offer a route to a carbon negative pathway, where carbonisation is used in processing to produce char.

Barriers

Capital intensity of cultivation systems is currently a limiting factor.

There are still significant technical and reliability barriers to overcome. At best it is anticipated this will be achieved in the next 3–5 years.

Requires large amounts of nutrients similar to existing agricultural systems most of which are currently CO2 intensive in production, though in a captive system these can be managed more effectively and ‘recycled’.

The reliability of systems must be proven for year round operation to ensure supply.

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